The price of coal has continued to slump, causing the majority of coal mining companies in Indonesia to stop operating and threatening to put them out of business.

According to Indonesian Coal Mining Association deputy executive director Hendra Sinadia, up to 80 percent of coal mining companies in Indonesia have temporarily shut down their operations.

'The [production cost] margin is negative. Why should they continue operating?' said Hendra as quoted by tempo.co.

Hendra said that from around 3,000 coal mining license (IUP) holders, only 500 companies were currently operating. Companies that have had to shut down are generally small-scale companies in mining areas such as Kalimantan.

However, Hendra guaranteed that coal production would still remain sufficient to meet domestic demand thanks to the high technology and large reserves owned by some larger companies. 'Those big companies can still operate efficiently,' he explained.

The average global for coal price was $64.48 per ton in June, while Indonesia's coal-price reference (HBA) was $59.59 per ton in the same month. The price is lower than previous year, where the average global price was $72.45 per ton. Last July, the HBA dropped again to $59.19 per ton. As a result, many coal companies face bankruptcy as their production cost exceeds the selling price.

According to Hendra, the development of steam power plants in Indonesia cannot sustain coal price due to the stagnant demand from the plants. (nov/kes)(+++)